Are you also investing in Tesla?

[Steph]

I agree that nothing is priced-in. Revenues in 2013 may be in the range of 2-3 billions. I you give it a good multiple of 10 as a growing tech company (price/revenues) this baby could be valued at 30B which is ten time the actual market cap.

When they start delivering, doubters will leave and an Apple-like hype will start.

 

[NigelM]

Does anyone honestly believe .....that Tesla won't be able to deliver on its 6k deliveries in 2012?

5k

An out and out delay (like the Roadster in 2007) would certainly be very bad but that isn't as likely as a slower than planned ramp up, which would only really be obvious after 3Q earnings (although it will be evident on these boards before then!)

Tesla in 2007 was a different animal. Any developmental delay would have been made known by now. *siry* is right about the ramp-up risk, although there are many others.

I think a bigger issue (as far as stock price is concerned) might be marketing fall-out regarding EPA mileage numbers.

 

[FalconNinetyD]

Morgan Stanley doesn't believe it! They "tweaked" their earnings model for TSLA today saying they only expect 2,000 deliveries this year:
Morgan Stanley Moderately Tweaks Tesla Motors Earnings Model

The market doesn't seem to care of believe it's valid, the stock is up 1% as of now, while the major indices are at about 0.4%...

 

[siry]

The things that are "priced in" by sell side analysts in their price targets are pretty significant - July start, flawless ramp up and selling out of 20,000 model S and 10-15,000 Model X every year they are in production, and maintaining 25% gross margins. Bluestar in 2014 (or 15 depending on the analyst). Thats what I am referring to. So there could be big things that happen outside that story that change the big picture but I think the stock reflects most of the known business plan being executed pretty well.

Steph - no way a car company gets 10x revenues or the price targets would already reflect that. Most car companies get less than 1X revenues. Tesla already gets a higher premium on forward sales because people can look beyond model s to bluestar.

 

[Steph]

Steph - no way a car company gets 10x revenues or the price targets would already reflect that. Most car companies get less than 1X revenues. Tesla already gets a higher premium on forward sales because people can look beyond model s to bluestar.

IMO, Tesla is not a car company. Just like Apple is not a phone company.

They are both tech companies. One who's making something that look and feel like a phone and turned its market up-side down. Another who make something that looks like a car but if you look inside, it's not a car as people know of a car.

When it smells and feels like a tech company, it is a tech company.

 

[Uncle Ron]

EDIT,,

 

[JRod0802]

Top people have been buying shares. They obviously know something that has not come into being yet, that has not been made even a little public.

Isn't that illegal?

 

[siry]

Steph,

Apple's price/sales is 3.8. Their Operating margin is 33.8%! (Tesla hopes to get mid-teens). They sell high-margin gadgets that are made relatively cheaply in china and even higher margin software and music. They are an extraordinary anomaly that of course many companies try to compare themselves to but usually it is not anywhere close.

Tesla has no doubt innovated in the auto space, particularly around powertrain obviously but also around design, but at the end of the day the economics of manufacturing automobiles (even EVs) is fundamentally different: more capital intensive, lower margins, longer development and replacement cycles, etc.

Lumping them together as "tech" companies as a way to get to valuation is way to broad a generalization.

 

[Johan]

Isn't that illegal?

Just what I was thinking . The insiders are exercising options as they come up due. Just look at the insider trading reports and you'll see the every sell is coordinated with stock aquisition that happens together with a buy option that is due (talking about CFO Ahuja, Passin, Straubel, etc.)

 

[Steph]

Siry,

Agreed that we can't really compare Tesla with Apple on valuation at the moment. Apple looks good but it doesn't have exponential revenue growth in the forecast, it could still grow, but it should grow at a much lower pace from now on (at least, that's the general sentiment) I believe that it is the reason why Apple's multiples are back to a more normal level. Tesla multiples are currently very high at around 17. That's a pretty good number

This high number is based in part of revenue expectations. I they book 3B in revenue in 2013, I doubt the ratio will go down do 1. I believe the ratio could go down to 10 by next year but if revenue is 3B, market cap should be $30B, so at around $300/share.

Of course the current number won't hold and it may be lower than 10, who knows. The market will decide.

But Elon and his gang know how to create hype, they proved-it many times. It's not a coincidence they are shipping performance and signature version first, it will be in all media big headline "300 miles - 4.4s all electric". They using the apple playbook page by page.

If you look at the photo of the battery pack, you could almost say it look like a big Iphone on 4 weels. Well, that's what it is!

I have very high hopes and confidence for this company and his CEO, if you look back, they always do what they say, paper trail is abundant. Why would it be different this time?

Cheers! And i'm not selling my shares anytime soon

 

[Iamthecaliflower]

Isn't that illegal?

It's not illegal so long as you disclose it. Insider purchases are very legal. I don't know how, but if someone with a $300-500million stake is continuing to buy, then I have to believe he knows something I don't. His entire fortune is at stake. He isn't stupid. He is soon to be a billionaire. I think he knows what he is doing. I foresee Elon Musk being one of the richest people in America within a couple of years. He is Iron Man.

 

[Larry Chanin]

Tesla has no doubt innovated in the auto space, particularly around powertrain obviously but also around design, but at the end of the day the economics of manufacturing automobiles (even EVs) is fundamentally different: more capital intensive, lower margins, longer development and replacement cycles, etc.

Lumping them together as "tech" companies as a way to get to valuation is way to broad a generalization.

Hi Darryl,

As a former Senior Vice President, Sales, Marketing and Service for Tesla are you at liberty to express your opinion regarding Tesla's handling of the public relations aspects of the so-called battery "bricking" issue? Do you think this issue will have any meaningful effect on the stock price in the weeks to follow, or do you think that things have already blown over?

Thanks.

Larry

 

[onlinespending]

Im confused by the short interest numbers. If there was any time where a "squeeze" would have happened it would have been in the last month as the company solidified its footing. I am very surprised that the short interest is still in the 24M range as most of those folks are heavily underwater and feeling pain. They must be banking on Tesla struggling during the launch/ramp up in the latter half of the year.

You're assuming those 24M shares are shorted by the same people/firms. I'm sure a lot of people were squeezed if they were shorting Tesla prior to earnings. But for everyone that was forced to cover, new short positions were taken after the stock soared to make up for those that covered. While the total number of short interest has remained constant, people are jumping in and out of positions all the time.

 

[NigelM]

Hi Darryl,

As a former Senior Vice President, Sales, Marketing and Service for Tesla are you at liberty to express your opinion regarding Tesla's handling of the public relations aspects of the so-called battery "bricking" issue?

Huh, interesting catch Larry.....:wink:

 

[siry]

I think the whole episode was handled in a way that is consistent with how Tesla managed things in the past (and will likely handle them in the future.) Tesla has always taken a pretty aggressive stance when challenged by press or by journalists, and this wasn't the first time they have punched back pretty hard. I think traditional PR pros would say they handle these things pretty poorly (Top Gear, Fisker, Dan Neil, Martin Eberhard, Pricing, etc. etc.) but if you look over the last years I think you'd be hard pressed to say that it has really slowed them down any. The wild card here is Elon, whose unique personality and profile is a bit of a game changer when it comes to how these things are perceived. The other wild card is the extraordinary support and proactivity of the community of EV enthusiasts (all of you guys as well as some bloggers) which plays an important role in how these issues get shaped in the short term. On the flip side, all of these follies (lawsuits, drama, etc.) may in fact add up to a negative brand impression in the market over time.

Short term I don't think that this "battery bricking" issue did much acute damage, but its hard to predict how all of these issues (perceived or real) play out when Tesla gets past the early adopters and starts selling into the "normals."

 

[siry]

You're assuming those 24M shares are shorted by the same people/firms. I'm sure a lot of people were squeezed if they were shorting Tesla prior to earnings. But for everyone that was forced to cover, new short positions were taken after the stock soared to make up for those that covered. While the total number of short interest has remained constant, people are jumping in and out of positions all the time.

Ah - very good point.

 

[Steph]

Some more taught about similarities between Apple and Tesla

- They both design and manufacture battery powered devices.
- They both benefit in battery tech research to make their device last longer.
- They are ahead of competitors in their own markets.
- They are innovators, they are market makers.
- They both own tons of IP
- They both own distribution & service channel.
- Apple has AppStore, tApps comming soon?
- They both have a fan club, Tesla's growing fast!
- Great CEOs (RIP Steeve)

What more?

 

[AnOutsider]

A LOT of reaching going on... I'm fairly sure those comparisons can be made about other companies that don't have similar valuations. Let's not let enthusiasm blind us.

 

[Steph]

A LOT of reaching going on... I'm fairly sure those comparisons can be made about other companies that don't have similar valuations. Let's not let enthusiasm blind us.

I'm looking at facts and hard numbers.

This company has the potential to change people''s view of the electric car, and if it works, we are at the beginning of a change as big as was the internet revolution.

And this time, i may make a buck out of it...

We are only at the beginning, nobody knows (except you and me) that this is coming.

How can I not be enthusiastic

 

[EVNow]

- They are ahead of competitors in their own markets.

Ahead in terms of ... ?